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TMI Blog2005 (4) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... pany to pay the balance of the admitted amount of Rs. 3,97,366/-, within 30 days of their receiving the said order. 2. The Commission had also issued an order to the Commissioner (Inv) attached to this Bench to investigate on certain specified points. The investigation report was filed by the Commissioner on 26-12-2003, with copies to the respondent Commissioner of Central Excise, Chennai III and the Additional Director General, DGCEI, SZ, Chennai. On request from the main applicant company, a copy of this report has also been supplied by the Secretariat of this Bench to the said main applicant. 3. The application were heard for settlement of the proceedings on 24-3-2004. Shri Venkataraman, Counsel, accompanied by M. Jayashri Venkataraman, appeared for the applicants along with S/Shri Dilip Kumar and Govindan, respectively, the Director and Manager (Finance), of the main applicant company. The Respondent Commissioner was represented by Shri K. V. Udaya Kumar, Deputy Commissioner. The Revenue also filed a written submission dated 24-3-2004. At the end of the said hearing the Bench directed both sides to file a synopsis of their oral submissions with copies to each other. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted sales proceeds of non-duty paid goods. Penalties and interest are also proposed to be imposed by the SCN under the provisions cited therein. 5. At the outset, it is pleaded that the value/price on which the non-levy/short levy has been worked out by the Department should be deemed to be cum-duty/cum-sales tax value, as the applicant has recovered and realised totally only the said amount from their customers and that they are, therefore, eligible for re-determination of the assessable value under Section 4 of the Central Excise Act, after abatement of the amount of duty proposed to be demanded and the sales tax payable thereon. On this account, the applicant pleads that even without going into the merits of the grounds for each individual demands proposed to be raised, the total liability would work out to only Rs. 52,24,236/-, as against the proposed duty demand of Rs. 83,56,360/-, on the above-said five counts. Reliance is placed on the decision of the Supreme Court in the case of M/s. Maruthi Udyog Limited, [2002 (141) E.L.T. 3 (S.C.) and CEGAT in the case of M/s. Sri Chakra Tyres Limited [2002 (142) E.L.T. A279 (S.C.). On the other hand, the Revenue in its report vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t going into the merits of each of the grounds for demand, works out to Rs. 52,24,236/- as contended by the Revenue in their revised submission, as against Rs. 11,97,866/- admitted as liability by the applicants and Rs. 83,56,360/- proposed in the SCN. 6. Dwelling on each of the grounds for demand, the Revenue proposes in the SCN to demand Rs. 39,696/- on M.S. barrels (in which the MODVAT availed inputs were received) cleared as scrap. The Revenue has, since conceded vide its written submissions dated 21-4-2004 and 2-2-2005, the applicants' claim that it is not demandable. Therefore, the Bench has nothing further to observe in this regard. 7. As for the duty demand of Rs. 94,801/- proposed in terms of Section 11D of the Act, the applicant claims that the said demand is already part of the proposed demand for Rs. 10,81,881/- as duty due on the unaccounted clandestine clearances (Annexure D5 to the SCN). The Revenue has also since conceded this, vide DGCEI letter dated 2-2-2005. However, the Revenue also has stated that "This is subject to accepting of adoption of assessable value of Rs. 195/- per Kg., the rate per kg as adopted by the department in worksheet. Otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises of the main applicant company, with the quantum reflected in the respective RG1 register/RT 12 returns, to arrive at the value of clandestinely removed goods, during the entire period, except for June, 2000. For the said month of June, 2000 alone, the quantity value of the clandestine clearances is indicated as "Obtained from the invoices packing list available in the various seized records which are listed in Annexures E3/6 to the SCN. 8.1 It is contended by the applicant that though the Annexures E3/2 to E3/5 annexed to the SCN also indicates such alleged clandestine clearance invoices/packing lists, the demand itself is based only on the 'sales summary' for the months of April to May and July, 2000, which 'sales summary' is nothing but bank statements. The applicant pleads that the said statements of theirs, actually contain indicate boosted figures of manufacture/turnover for presentation to the Bank and that the details therein cannot form the basis for allegation of clandestine clearances. In support, the applicant relies on certain decisions of the CEGAT. In addition, it is also submitted that the figures of bank statements tallied till March, 2000 with RG1/RT12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue pleads that when it is substantiated/corroborated by any other independent evidences, it can be relied upon to qualify the clandestine clearance quantity. Reliance is placed in support of this plea on CEGAT decision in the case of Ram Gelkem Industries Private Limited v. CCE, Madurai - 1997 (89) E.L.T. 178 and Suvane Polymers Private Ltd. v. CCE, Hyderabad - 2000 (120) E.L.T. 148. It is further pleaded in this context that as per the packing lists cited in annexures E3/1 to E3/3, the clandestine clearance during April to July, 2000 was 33,055.08 Kgs. The applicant themselves accept clearance to M/s. Amman Agencies of 25,968.340 Kgs for the months of March to May, 2000 based on the seized computer print outs and with reference to annexures E2/3 and E3/6 to SCN a quantity of 11319.450 Kgs of clearance for June and July, 2000. It is, therefore, contended that the quantum of clearance reflected in the sales summary statements is corroborated by these figures and hence can be taken for quantification of clandestine clearance for assessment purposes. With regard to the value of Rs. 195 per kg questioned by the main applicant company, the Revenue contends that the figures of production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch price list was recovered or admitted by any of the dealer of the applicant's company. Considering these aspects the Bench is inclined to accept the additional duty liability disclosed by the main applicant on this scope, though after dis-allowing abatement of the sales tax payable, the correct liability would be Rs. 5,75,525/-. [Annexure-A] 9. Next in line is the differential duty of Rs. 1,49,273/- proposed to be demanded on charges of mis-declaration of density. The main applicant contends that the said charge, as also the demand are based on pages 100 and 101 of Aneexure-Cl/1 to the SCN, according to which the goods involved were of 23 density as against the density of 10 declared on the corresponding packing lists. The Revenue also relies on the alleged instruction of Sh. Sameer Malhotra, one of the Directors of the main applicant company on the aforesaid pages (100 and 101 of Annexure C-l/1) to his Manager (Finance) Sh. Govindan : "Please take care of collections and the same is to be done on the above basis". However, it is contended by applicant that Sh. Govindan had deposed categorically in his statement dated 19-12-2000 that though there is a difference in the den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price does exist for the said goods. Therefore, in all fairness the benefit of doubt has to go to the applicant. Accordingly, the proposed demand in the SCN on charges of mis-declaration of density does not stand scrutiny. 10. As for the allegations of under-valuation and grade substitution, involving the proposed demand of Rs. 69,90,509/- for the period March, 1999 to July, 2000, taking up first the charge of grade substitution, the applicant admits the charge but only for the period commencing from December, 1999. It is pleaded that the allegation of Revenue is based solely on the documents recovered from a dismissed employee, Shri R. Jayapalan, ex-Marketing Manager of the applicant company. It is also highlighted that the said ex-employee had deposed in his statement even at the time of investigation that grade substitution had taken place only from December, 1999. On the other hand, Revenue has also referred to the statement of Shri Sameer Malhotra, Director of the applicant company regarding grade substitution in September and October, 1999, which fact is according to Revenue, supported by the Statement of Shri Dilip Kumar, another Director of the applicant company als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December, 1999 is not convincing. Shri Jayapalan, in his statement, dated 1-1-2001, had deposed, inter alia, on grade substitution. There is a tabular statement indicating the density and prices of different grades during March, 1999 to October, 1999, November, 1999, and from December, 1999 till his departure (from the applicant company). This table, according to Shri Jayapalan, indicates that M/s. Springeel adopted one price from March to October, 1999, another price for November, 1999 and another price from December, 1999. Only in the last 3 columns relating to December, 1999 till the date of his departure, there is a mention of A Grade, B Grade and A Grade shown as B Grade, whereas for the earlier periods, there is mention of only A and B Grades. Below the said tabular statement (page 2 of the statement) it is recorded that "The prices adopted from December, 1999 varies from the prices adopted during November, 1999 to the extent a new set of prices were introduced from December, 1999 for the 'A Grade goods' cleared by Springfeel as 'B Grade Goods'. Other than that the prices for 'A Grade goods' remained the same during November, 1999, December, 1999 and afterwards. This new pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Shri Jayapalan, besides the price details, recovered by Revenue on the search of the premises of the applicant. On the other hand, the applicant's contention appears to be that the statement of Shri Jayapalan, a disgruntled ex-employee, cannot be relied, that the computer printed price list relied upon by the Revenue is not a price list for sale, but prices suggested by the production department to make even with the cost of production, that the department has not seized any such price list from any of the dealers matching the computer printed prices, which were generated on their own computer on the day of the search and at the request of Revenue, and that the Revenue has not filed evidence of actual collection of these amount. One more plea of the Revenue is that the applicant had sold 'primary blocks' at Rs. 140/- per kg, and hence the PU foam products should have been sold at a much higher price. As against this, the applicant contends that 'primary blocks' are different product, in terms of composition, application, class of buyer and other financial consideration and not comparable with or connected to PU foam products. 10.6 In this context, the Bench observes that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down stream products, it only gives scope for doubt as to whether PU sheets could have been sold at a lesser price. In the absence of any specific evidence of realisation of a higher price on the PU sheets, the Bench is not able to come to any conclusion on the extent of actual realisation claimed by Revenue as having been realised by the applicant. 10.7 The Bench also takes note in this context that during the material period erstwhile Rule 173C(11) was in force and the applicant claims to have been allowed the facility of assessment under this Rule. It is more interesting that the applicant claims to have sold the products earlier and later also at the same prices as in dispute, as claimed by them for the disputed period and that Revenue has not raised any demand or initiated any proceeding to modify the assessable value. On this, the Revenue has filed a report (F No: INV/DGAE/CHE/62/2000 dated 14-5-2004), inter alia, stating that "In this regard, it is submitted that it has been reported by the Commissioner of Central Excise, Chennai III that for the later period (since 10-7-2000) no demands have been made, as no evidence exists." It is further reported therein that "The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 32K of the Act. But, with specific regard to interest alone, the Bench is not inclined to grant total immunity from interest as the duty was not discharged at the appropriate time Rs. 3,97,866/- was paid, though admitted, only after the passing of Admission Order by this Bench and even now a large part of the above liability still remains unpaid. 12. Further, the main applicant company having been found qualified for immunities, the Bench holds that in equity the co-applicants also deserve immunity of similar order. 12.1 Taking into account the above facts and circumstances, the Bench settles the proceedings in terms of Sub-Section (7) of Section 32F of the Central Excise Act, 1944, subject to the terms and conditions mentioned below :- (i) The duty in the instant proceedings is settled at Rs. 35,22,121/-. Since M/s. Springfeel Polyurethane Foams Private Ltd. has already paid Rs. 11,07,866/- they shall pay the balance of Rs. 24,14,255/- within 30 days from the date of receipt of this order and report compliance to the Bench and the Revenue. (ii) The applicant is granted immunity from interest under the provisions of Central Excise Act, 1944 is exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% 1 2 3 4 5 6 7 8 9 10 1 Mar-00 2171595 268100 312997 581097 1590498 1371119 219379.04 0 219379 2 Apr-00 2592588 373862 466825 840687 1751871 1510234 241637 8459 233178 3 May-00 600000 255535 274006 529544 70456 60738 9718 7629 2089 4 Jun-00 983175 0 0 0 0 847565 155610 22059 113551 5 Jul-00 385187 0 0 0 0 332058 53129 45802 7327 83949 575525 S.No. Month Duty Demand Month Duty Demand Month Duty Demand Month Duty demand 1 27-Apr-00 1594 16-May-00 154 28-Jun-00 780 01-Jul-00 948 2 27-Apr-00 2421 03-May-00 3762 29-Jun-00 2869 01-Jul-00 988 3 27-Apr-00 828 23-May-00 780 27-Jun-00 6259 01-Jul-00 741 4 28-Apr-00 1066 16-May-00 954 29-Jun-00 6563 03-Jul-00 3952 5 28-Apr-00 696 17-May-00 880 30-Jun-00 5588 04-Jul-00 4013 6 28-Apr-00 852 18-May-00 1099 04-Jul-00 3740 7 29-Apr-00 1002 05-Jul-00 4055 05-Jul-00 678 06-Jul-00 4976 06-Jul-00 4440 07-Jul-00 7418 07-Jul-00 2726 08-Jul-00 7127 Total 8459 7629 22059 45802 83949 ANNEXURE - B & ..... 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